Open Source for Accounting and Enterprise Systems Open Source for Accounting and Enterprise Systems

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Text of Open Source for Accounting and Enterprise Systems Open Source for Accounting and Enterprise Systems

  • Open Source for Accounting and Enterprise Systems

    Thomas Tribunella State University a New York at Oswego USA

    James Baroody Rochester Institute at Technology LISA

    ABSTRACT

    This chapter introduces open source software (OSS) for accounting and enterprise information systems.

    It covers the background. functions, maturity models, adoption issues, strategic considerations, and

    future trends for small accounting systems as well as large-scale enterprise systems. The author hope

    that understanding OSS for financial applications will not only inform readers of how to better analyze

    accounting and enterprise information systems but will also assist in the understanding of relationships

    among the various functions..

    INTRODUCTION

    This chapter will inform the readers about the

    feasibility and potential applicability of open

    source software (OSS) to the functional areas of

    accounting and finance. Small and enterprise- scale systems will be examined. The chapter will

    review background information and frameworks

    for analyzing the business case related to financial applications of OSS.

    ()SS systems can provide support to indi v id ual

    business functions or integrated suites of func-

    tions. For example. open sou rce enter prise systems provide an integrated set of business functions that

    are organized around business processes.

    In this chapter, we will address the concerns

    of managers and educators who are interested

    in learning more about open source business

    systems. We studied available OSS accounting

    and financial applications by reviewing available

    documentation on Web sites. For a number of

    enterprise applications we reviewed, the system functionality and market positioning, downloaded

    the systems and studied system requirements.

    installed and set up the systems. and reviewed

    the license agreements. Initially, the chapter will

    review the current state of OSS business systems with a focus on definitions and functional appli-

    cations of small accounting systems and larger

    enterprise systems. We will then address the

  • critical factors and decision frameworks relevant to the adoption OSS for accounting and financial applications. In addition. we will explore future trends in ()SS financial reporting systems.

    BACKGROUND OF OSS ACCOUNTING AND FINANCE APPLICATIONS

    In this section, we will discuss the business issues that are a required background in order to have a general understanding of accounting and financial applications with OSS. Open source is used to describe "a software program or set of software technologies that are made widely available by an individual or group in source code form for use. modification, and redistribution under a license agreement with having very few restrictions" (American Bar Association. 2006). The logic be- hind the open source philosophy is that users must be able to read. redistribute. and modify the source code for a piece of open source soft ware. In contrast. a traditional software I icense is designed to protect the intellectual property of the software developer and severely restricts reading. redistributing, and modifying source code. Since an open source license gives broad rights to read, redistribute, and modify the source code for a piece of OSS users constantly improve the OSS by adapting it to various applications and fixing bugs.

    The intellectual and legal origin of most open source license agreements can he traced to two sources: the GNU General Public License (GPI.) and the University of California BSD Unix license agreements(McGowan. 2001). These agreements reflect the goal of creating a community environ- ment in which innovation and quality improve- ments are rapidly shared and distributed through common ownership of intellectual property rather than through individual or organizational ownerships th rough copyrights (Kennedy. 2001). Improvements made by individuals are made publicly available back to the community.

    Statistics available from www.freshmeat.net (Freshmeat, 2006), a Web site described as one of the largest indexes of Unix and cross-platform OSS, indicates that these two license forms (or close revisions of them) account for almost 80% oft he license agreements used by projects tracked on the site. Since 20% of the projects utilize dif- ferent types of agreements, users must examine carefully the license agreement of the system they want to use.

    We downloaded and reviewed the license agreements for a number of enterprise. account- ing, and financial applications (see Tables I and 2). For this sample. The GNU General Public License was the most common agreement. it is important to note that as the target market for these systems moves toward large enterprises. coin me r- cial licenses and hosted licenses emerge (Tustena CRM, 2006). Given the variations of licensing agreements demonstrated in this sample, users must carefully compare the license agreement with the requirements of their organi zations.

    The trade press and other publications em- phasize that OSS is about back-office technology such as servers and operating platforms. The relevance of OSS to functional areas, including accounting, finance and enterprisesystems. is not well understood. Historically, OSS has focused on technology components such as the L inux operating system and the Apache Web server. Open source business applications are beginning to emerge, the most familiar being OpenOffice, an OSS application office suite supporting word processing, presentation, and spreadsheet ap- plications. Now available as OSS is a variety of accounting, financial and enterprise systems ap- pl ications. Reflecting the potential these offerings have in the marketplace, venture capital is flowing into open source business applications, which be an indicator that these OSS business applications will play a significant role in the future (Cook. 2004; Marshall, 2005; Stein, 2005).

    Finding operating systems and servers to support the various open source accounting and

  • finance (A&F) systems (except venture capital) is not a problem. Microsoft (MS) Windows, Timm (Red I Ian, Solaris (Sun).BSD. Mac OSX. and UNIX all have accounting applications that run on their platforms. OSS systems will run on most popular servers such as Microsoft. Apache (the most popular server with more than 50% of all installations), Sun, and so forth. Table I dis- plays sonic of the more well-known OSS small accounting systems and the operating systems they require (Sourceforge, 2006).

    To compile Table 1, we went to SourceForge and checked all software under the Topic menu listed as office/business -> financial -> account- ing. This identified more than 500 systems as of June 2006. We then identified all systems rated as mat ure, stable. or production. Many systems display the term accounting under topics, but

    we question whether some of these systems are true accounting systems. Therefore, we exam- ined company Web sites to determine through product information if the systems were capable of most traditional accounting functions. In ad- dition. we checked to determine if the company was still actively operating and if the software was current. We also reviewed recent journal articles on the subject to see- if the companies were cited. We understand that this market is in a continual state of change and many new products arc appearing. We feel that we have highlighted most of the more well-known sys- tems. but we may have missed a few. Certainly, the OSS accounting market would benefit from some consolidation.

    In addition to small accounting applications. there are other business applications available

  • in the form of OSS systems. For example. func- tions such as personal financial management. e-commerce, office suites (e.g.. spreadsheet. word processing. database, graphical presenta- tion). Web browsers. R DIM (relational database management). c-mailing clients, and strategic planning are all as ailable in OSS. The enter- prise scale accounting systems usually interface with a relational database as well as with other applications. Table 2 displays some of the more well-known OSS enterprise scale accounting systems and summarizes the target market ap- plications. database, and license requirements of each system (Compicre. 2006: GNUCash. 2006: Sourceforge 2006: Ti R P. 2006; Tustena CR M. 2006; WebERP, 2006).

    Most open source accounting and finance (A&F) systems work very well with relational database systems. As a matter of fact. sonic open source systems run on open source RDBM sys- tems. For example. Compiere runs on MySQL, a mature and stable open source RDBM system. Even though there are many related applications that work with A&F systems. this chapter will focus mainly on the financial applications of these systems. However, we will briefly discuss closely related applications since they interface with A&F applications.

    MAIN FOCUS OF FINANCIAL OSS SYSTEMS: FUNCTIONS AND ADOPTION CONSIDERATIONS

    In this sect ion. we first will describe the functions of small and enterprise-scale A&F systems. and then we will discuss the frameworks as well as the considerations used to evaluate these systems. Evaluation criteria w ill include quantitative finan- cial models and qualitative maturity and strategic

    considerations.

    Small-Scale Business Systems

    A&F systems can be viewed as a functional set of application modules that can be mixed and combined. Traditional OSS modules support func- tions such as general ledger, accounts receivable. account